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New World Bank Chief Off to Aggressive Start : Economics: The former Wall Streeter goes on the defensive, saying cuts in the institution would be shortsighted.

June 02, 1995|From Reuters

WASHINGTON — James Wolfensohn took the helm of the World Bank on Thursday and immediately went on the offensive, saying it would be shortsighted of Congress to chop funding for the lending institution that assists the world's poorest countries.

At a packed inaugural news conference, the former Wall Street financier defended the institution and particularly its International Development Assn. arm, which has come under scrutiny by Republican lawmakers looking for ways to cut spending.

"I want to say at the outset that IDA is central to the activities of the bank," Wolfensohn told reporters, adding that he is worried that lawmakers could go too far.

The United States is already in arrears on its commitment to the current IDA funds, and many in Congress have said that future commitments are also in jeopardy.

Wolfensohn, who headed the Wall Street investment firm that bears his name, assumes the presidency of the World Bank from the late Lewis Preston at a time when development institutions are coming under pressure to do more with less.

"What he started I hope to finish," the 61-year-old Australian-born Wolfensohn said of his predecessor. Wolfensohn was named to the post by President Clinton early this year.

He said he plans no immediate changes at the bank, but he made it clear that he will seek to "right-size" the institution rather than simply downsize it, as some have suggested.

He also said he will look for ways to work more closely with the private sector, though the bank's own regulations do not currently allow loans directly to companies.

Wolfensohn said he plans to take a number of trips, starting with an African tour this month, during the first half-year of his tenure to get a better feel for conditions in many of the bank's 178 member countries.

There have been suggestions that the various development banks not overlap their activities, but Wolfensohn said he dislikes the idea of fighting a turf battle.

He said the giant lending institution is not just another bureaucratic organization but "is an institution to which I've come with a dream, which is to try and make things better."

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